Commercial property prices level off in Chicago amid nationwide rise

Chicago-area commercial property prices have leveled off in the past six months following a years-long rise, which continues nationwide.

After a fourth quarter that saw the first drop in prices in more than five years, Chicago’s Q1 start to 2018 saw prices hold steady. That happened even as the greater national market continued its upswing, according to a Real Capital Analytics price index reported by Crain’s.

The index showed property values during the first quarter were even with where they were in 2007, just before the recession hit. Year-over-year, the property values were up 2.8 percent. Nationwide, though, prices surged 8.5 percent year over year.

Real Capital’s Jim Costello told Crain’s that new supply has landlords competing for tenants. That limits what they can charge in rent, which affects how much they can sell their properties.

Other markets such as Manhattan and San Francisco are seeing intense investor demand that’s driving up prices.

“Chicago doesn’t have that,” Costello said. “You still need that job growth to drive up rents. Chicago doesn’t have the same dynamic kind of companies in terms of tech and development.” [Crain’s] — John O’Brien